Thursday, August 23, 2012

Why Disillusionment with Cleantech is Not Such a Bad Thing

By Christine Shapard, Executive Director, Colorado Cleantech Industry Association

These days, some major proponents of cleantech are having a hard time staying optimistic about the future of the industry. With continuing news of layoffs at major companies like Vestas and closures of some businesses, like Abound Solar, it’s easy to think that cleantech may not become an economic engine within the next decade.

But if history proves us correct, cleantech will only flourish in the next few years because of the dedication of a few. Sometimes, the biggest things happen after the parade has passed.

Have you ever heard of the Hype Cycle? Coined by Gartner, Inc, a hype cycle is a graphic representation of the maturity, adoption and social application of specific technologies. A hype cycle is a good representation of how nascent technology industries grow, from the breakthrough Trigger Point, to Irrational Exuberance, through the Trough of Disillusionment, up the Slope of Enlightenment and landing on the Plateau of Productivity. Hype cycles can be applied to almost all new technology industries including smart phones, internet sales, and search engines, to name a few.

What about cleantech? A nascent industry if there ever was one. Yes, the Gartner Hype Cycle applies to cleantech, as well. So where are we? About five years ago, some in the cleantech ecosystem were in the irrational exuberance state and witnessed high valuations along with high levels of venture dollars flowing into the industry. Today? That’s a tricky question for the cleantech industry. Because cleantech encompasses such a wide variety of technologies, we find our companies at various points in the cycle. 

Of particular concern of late are the companies mired in the trough of disillusionment. A few of the early high flyers have exited the market due to economic contraction, global competition, poor planning or a myriad of other reasons. In turn, some venture capital has pulled away from early stage investing because they were burned at the beginning, which is not good for the current start-up community. The good news is, the market is correcting itself and companies should begin entering the slope of enlightenment. Gartner points to the slope as the point at which enterprises start to recognize how the technologies can benefit their businesses. More instances of how the technology can benefit the enterprise start to crystallize and become more widely understood. Second- and third-generation products appear from technology providers. 

Colorado’s cleantech community continues to innovate, regardless of the national political rhetoric and the headwinds against them at the moment. I am confident that once we move beyond being mired in this negative cycle, the industry’s well-led companies and viable technologies will see an influx of capital and sustained growth. 

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